Leveraging Digitalization, Innovation and Absorptive Capacity for Entrepreneurial Performance: Evidence from Halal MSMEs in Indonesia

Rizaldi Yusfiarto; Jawad Zacaria Salic; Ahmad Febriyanto

doi:10.14421/grieb.2026.%x

Authors

Rizaldi Yusfiarto Universitas Islam Negeri Sunan Kalijaga, Yogyakarta, Indonesia https://orcid.org/0000-0002-5035-702X (unauthenticated)
Jawad Zacaria Salic Mindanao State University, Marawi City, Philippines https://orcid.org/0000-0002-9237-9980 (unauthenticated)
Ahmad Febriyanto Universitas Sebelas Maret, Surakarta, Indonesia https://orcid.org/0009-0001-8578-0151 (unauthenticated)

DOI:

https://doi.org/10.14421/grieb.2026.%25x

Keywords:

Digital Technology, Absorptive Capacity, Innovation Capability, Entrepreneurial Performance, Halal MSMEs

Abstract

This study aims to analyze the effects of Digital Technology and Absorptive Capacity on Product Innovation Capability and their impact on Entrepreneurial Performance among Halal Micro, Small, and Medium Enterprises (MSMEs). The study adopts a quantitative approach using a survey method of Halal MSME owners and managers. Data were analyzed using Partial Least Squares Structural Equation Modeling. The results show that Absorptive Capacity has a positive and significant effect on both Innovation Capability and Entrepreneurial Performance. In addition, Digital Technology also has a positive and significant effect on Innovation Capability as well as MSMEs Entrepreneurial Performance. However, the findings indicate that Product Innovation Capability does not have a significant direct effect on Entrepreneurial Performance. This suggests that improvements in MSME entrepreneurial performance are driven more by firms’ ability to absorb knowledge and leverage digital technologies than by product innovation alone. This study implies that Halal MSMEs need to strengthen their learning and knowledge management capabilities and optimize the use of digital technologies in order to enhance competitiveness and entrepreneurial performance. Future research is encouraged to further examine the mediating role of Product Innovation Capability or to incorporate other relevant variables.

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